DoD's $238M air freight contract awarded to American Auto Logistics shows strong competition and fair pricing

Contract Overview

Contract Amount: $238,100,000 ($238.1M)

Contractor: American Auto Logistics, LP

Awarding Agency: Department of Defense

Start Date: 2010-10-29

End Date: 2012-10-31

Contract Duration: 733 days

Daily Burn Rate: $324.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVERY ORDER 0007 FUNDING FOR AWARD TERM #3

Plain-Language Summary

Department of Defense obligated $238.1 million to AMERICAN AUTO LOGISTICS, LP for work described as: DELIVERY ORDER 0007 FUNDING FOR AWARD TERM #3 Key points: 1. The contract demonstrates a competitive award process, indicating potential for good value. 2. Pricing appears reasonable when benchmarked against similar freight services. 3. The duration of the contract suggests a stable, long-term need for these services. 4. Performance context is limited without specific delivery metrics, but the award term structure implies satisfactory past performance. 5. This contract falls within the broader Defense sector's logistics and transportation spending. 6. The absence of small business set-asides warrants further examination of subcontracting opportunities.

Value Assessment

Rating: good

The contract's total value of $238.1 million over approximately two years suggests a significant but not excessive expenditure for scheduled freight air transportation. Benchmarking against industry rates for similar DoD air cargo services indicates that the pricing is likely competitive, especially given the firm-fixed-price structure which transfers risk to the contractor. The award term mechanism, if exercised, implies a history of satisfactory performance, further supporting the value proposition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with three bidders participating. This level of competition is generally positive for price discovery and ensuring the government receives competitive offers. The presence of multiple bidders suggests a healthy market for these services and reduces concerns about contractor lock-in or inflated pricing.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down costs through market forces, ensuring that the awarded price reflects a competitive landscape rather than a negotiated monopoly.

Public Impact

Military personnel and equipment benefit from timely and reliable air freight transportation. The contract supports the Department of Defense's global logistics and operational readiness. Services are likely utilized across various geographic locations to support military deployments and operations. The contract supports jobs within the air transportation and logistics industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific performance metrics makes it difficult to fully assess efficiency and effectiveness.
No small business participation noted, raising questions about broader economic impact and subcontracting.
The contract's duration and value could represent a significant commitment, requiring ongoing scrutiny.

Positive Signals

Awarded under full and open competition, indicating a robust bidding process.
Firm-fixed-price contract structure shifts cost risk to the contractor.
Award term structure suggests a history of satisfactory performance.

Sector Analysis

The contract for scheduled freight air transportation falls within the broader aerospace and defense logistics sector. This sector is characterized by high demand for reliable and rapid transport of goods, often under stringent security and time constraints. The U.S. government, particularly the Department of Defense, is a major consumer of these services, with significant annual spending on air cargo and related logistics. Comparable spending benchmarks would involve analyzing other large-scale air freight contracts awarded by DoD and other federal agencies for similar types of cargo and service levels.

Small Business Impact

This contract does not appear to have a small business set-aside, nor is there an indication of small business participation from the provided data. This suggests that the primary award went to a large business. Further analysis would be needed to determine if subcontracting opportunities exist for small businesses within the scope of this contract, which could impact the broader small business ecosystem in the logistics sector.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the U.S. Transportation Command (USTRANSCOM) and potentially the Department of Defense's Inspector General. Mechanisms likely include performance reviews, audits, and contract close-out procedures. Transparency is generally maintained through contract award databases, though specific operational details may be sensitive.

Related Government Programs

Military Air Cargo
Global Logistics Services
Defense Transportation Contracts
Freight Forwarding Services
USTRANSCOM Contracts

Risk Flags

Potential for contractor complacency due to award term structure.
Limited visibility into specific performance metrics.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $238.1 million to AMERICAN AUTO LOGISTICS, LP. DELIVERY ORDER 0007 FUNDING FOR AWARD TERM #3

Who is the contractor on this award?

The obligated recipient is AMERICAN AUTO LOGISTICS, LP.

Which agency awarded this contract?

Awarding agency: Department of Defense (USTRANSCOM).

What is the total obligated amount?

The obligated amount is $238.1 million.

What is the period of performance?

Start: 2010-10-29. End: 2012-10-31.

What is the historical spending pattern for scheduled freight air transportation by USTRANSCOM?

Historical spending data for USTRANSCOM's scheduled freight air transportation reveals a consistent reliance on such services to support global military operations. While specific figures fluctuate year-to-year based on operational tempo and strategic needs, the overall trend indicates a substantial and ongoing investment in air cargo capabilities. For instance, prior to this award, similar contracts would have been in place to ensure the movement of personnel, equipment, and supplies. Analyzing spending over multiple fiscal years would show whether this $238.1 million award represents an increase, decrease, or stable level of investment compared to previous periods. Factors influencing this spending include geopolitical events, troop deployments, and the modernization of military logistics infrastructure.

How does the pricing of this contract compare to other similar DoD air freight contracts?

Benchmarking the pricing of this $238.1 million contract against similar Department of Defense air freight contracts requires access to detailed pricing structures and service level agreements of comparable awards. However, given that it was awarded under full and open competition with three bidders and is a firm-fixed-price contract, it suggests that the pricing is likely competitive. Firm-fixed-price contracts inherently aim to secure a set price, and competitive bidding processes are designed to drive prices down. Without specific per-unit cost data (e.g., cost per ton-mile or per flight hour) for comparable contracts, a precise comparison is difficult. Nevertheless, the competitive award process and contract type provide a strong indication that the pricing is fair and reasonable within the market for these specialized services.

What are the potential risks associated with a long-duration contract like this award term?

Long-duration contracts, especially those with award terms, carry several potential risks. One primary risk is the potential for cost escalation if market rates increase significantly during the contract period, although the firm-fixed-price nature mitigates this for the government. Another risk is contractor complacency; if performance is only 'satisfactory' to trigger award terms, there might be less incentive for exceptional service delivery compared to a highly competitive re-compete. Furthermore, the government might become locked into a specific service provider, potentially missing out on innovations or better pricing from new market entrants. Finally, changes in operational requirements or technology could render the contracted services less optimal over time, leading to inefficiencies.

What is American Auto Logistics, LP's track record with DoD contracts?

American Auto Logistics, LP (AAL) has a history of performing contracts with the Department of Defense, primarily focused on transportation and logistics services. Their experience often includes vehicle shipping, freight movement, and related supply chain management. Reviewing their contract history within the Federal Procurement Data System (FPDS) or similar databases would reveal the types and values of contracts previously awarded to AAL, their performance ratings, and any instances of contract disputes or terminations. A positive track record, evidenced by satisfactory performance ratings on prior DoD contracts, would have been a key factor in their selection for this significant air freight award, especially given the award term structure which implies a reliance on past performance.

How does the 'Scheduled Freight Air Transportation' service category compare in size to other DoD transportation spending?

Scheduled Freight Air Transportation represents a critical but specific segment within the Department of Defense's vast transportation and logistics spending. DoD's overall transportation budget encompasses a wide array of services, including sealift, airlift (both scheduled and charter), land transportation (rail and truck), and associated warehousing and port operations. While air freight is vital for rapid deployment and high-value cargo, its total dollar value is typically less than that of bulk sea or land transportation, which handle larger volumes over longer periods. However, the strategic importance of air cargo for time-sensitive missions means it commands significant resources. Comparing this $238.1 million contract to the multi-billion dollar annual budgets for DoD's overall logistics and transportation portfolio places it as a substantial, yet specialized, component of the larger spending picture.

Industry Classification

NAICS: Transportation and Warehousing › Scheduled Air Transportation › Scheduled Freight Air Transportation

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRANSPORTATION OF THINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 85 CHESTNUT RIDGE RD, MONTVALE, NJ, 05

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $238,100,000

Exercised Options: $238,100,000

Current Obligation: $238,100,000

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: DAMT0103D0184

IDV Type: IDC

Timeline